CFTC FILES ADMINISTRATIVE COMPLAINT AGAINST FARMERS COOPERATIVE
COMPANY AND THREE EMPLOYEES CHARGING VIOLATIONS OF THE COMMODITY EXCHANGE
ACT AND REGULATIONS

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
today the filing of a five-count administrative complaint naming
Farmers Cooperative Company (Farmers Co-op), a cooperative grain
elevator located in Farnhamville, Iowa, and three elevator employees,
Richard Houge, John McPherson, and Larry Peterson.

The complaint, filed January 12,
1999, charges that Farmers Co-op, aided and abetted by Houge and
Peterson, violated Section 4(a) of the Commodity Exchange Act (CEA) by
offering and entering into "hedge-to-arrive" (HTA) grain
contracts which constituted contracts for the purchase and sale of a
commodity for future delivery, but which were not conducted on a
designated contract market. According to the complaint, Farmers Co-op
permitted farmers to buy back their HTA contracts at any time before
delivery was required under the contract and thereby extinguish their
delivery obligations by means other than the actual delivery of grain.

In addition, the complaint charges that Farmers Co-op, aided and abetted
by Houge and Peterson, violated Section 4c(b) of the CEA and Commission
regulations 32.2 and 33.3(b) by offering and entering into illegal
off-exchange agricultural options contracts. The off-exchange
agricultural options contracts obligated the farmers to sell grain to the
co-op by a specified date at a fixed price if the co-op exercised the
options. Farmers Co-op also permitted producers to buy back their
options, thereby extinguishing the producers' obligations under the
options.

The complaint also charges that Farmers Co-op, aided and abetted by
Houge, McPherson and Peterson, operated as an unregistered futures
commission merchant in violation of section 4d(1) of the CEA by extending
credit to farmers for the purpose of placing and maintaining
farmers' orders to buy and sell exchange-traded put and call
options, and certain exchange-traded futures contracts.

Finally, the complaint charges that Farmers Co-op, aided and abetted by
the three employees, failed to provide risk disclosure statements and
monthly profit and loss statements to the farmers who were allowed to buy
and sell the exchange-traded futures and options contracts, in violation
of CFTC regulations 1.33(a) and 1.55.

A public hearing has been ordered to determine if the charges in the
complaint are true, and, if so, what sanctions, if any, are appropriate
and in the public interest. Possible sanctions include an order directing
the respondents to cease and desist from violating the CEA and Commission
regulations, civil monetary penalties of not more than the higher of
$100,000 or triple the monetary gain for each violation, and restitution
to farmers where appropriate.